1. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Analysing the Trade in Services Data Draft analytical (annex 7) OECD Statistics Directorate

2. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Introduction 1.In September 2007 at the TFSITS meeting in Paris OECD presented paper setting out draft proposals for an analytical annex. 2.It addressed six themes highlighted by the responses to the world wide consultation and slightly amended at the Madrid (January) 2007 and Vienna (March) 2008 meetings. 3.Purpose of the annex: to provide a toolbox to make better use of trade in services data, which would ultimately help to improve the data quality.

3. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Worldwide consultation priority ranking 1) Combining balance of payments data, foreign affiliates trade data, and mode 4 data for analysis; 2) addressing linkages between services trade and production data; 3) how to link trade in services data with merchandise trade statistics showing overlaps and gaps; 4) bilateral asymmetries in trade in services data applying the data to models of world trade flows; 5) analysis on a sectoral basis of trade in particular services – such as health services; 6) identification of services for which a country has a comparative advantage in trade.

4. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 1. Combining balance of payments data, foreign affiliates trade data, and mode 4 data for analysis; A text taking a broder view on international delivery of services (setting BOP,FATS and mode 4 in same picture) and giving an example on software services was was provided from the BEA. Diagram illustrating the BEA example on software services.

5. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 1. Diagram on modes of supply (software example)

6. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 2) addressing linkages between services trade and production data; A list of trade indicators –Basic Export propensity. Import penetration –Broader view of services delivered Outward services sales of FA + Services exports (ODS) Inward services sales of FA + Services imports. (IDS) A table produced by statistics Canada where trade is broken down by industry.

7. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Outward Delivery of Services (ODS). Where ODS= Total exports of services and outward foreign affiliates sales of services. Xs= BoP Total services exports SFos= Outward foreign affiliates sales of services excluding Wholesale, retail trade and repairs (ISIC G) and construction (ISIC F) XFos=FATS outward exports of services to the country of the parent or to a third country. Theme 2

8. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics If aim of the analysis is to look at the affects of trade on the home economy (benefits of trade), smaller weight should be applied on FA sales information compared to Exports information as in term of primary flows: Exports: all gains from exports accrues to home economy Foreign affiliates outward: Only a share of the profit would accrues to the domestically owned parent company. W=weight (rate of return of outward DI ?) applied on the value of services local sales of foreign affiliates where 0<w<1. Outward Delivery of Services divided by GDP (ODS’). Theme 2

9. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Outward delivery of services Theme 2 Affiliates of A Exports of services Xs Local sales SF Os -XF Os Share (w) of profit accrues to home economy Trade data Production data Exports by FAs to parent XF Os All Export money accrues to home economy

10. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Inward Delivery of Service indicator (IDS). Adds the value of services imports and inward foreign affiliates local sales of services. IDS = total imports of services and inward foreign affiliates sales of services Ms = BoP Total services imports SFis = Inward foreign affiliates sales of services excluding Wholesales, retail sales and repairs (ISIC section G) and construction (ISIC section F) XFis = Exports of services of inward foreign affiliates to the country of the parent or a third country. Theme 2

11. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Inward Delivery of Services divided by Domestic Demand (IDS’). If aim of the analysis is to look at the effects of trade on the home economy (cost of trade), equal weight should not be applied on imports and FA sales as in term of primary flows: Imports: all expenses of imports accrue to foreign economies Foreign affiliates inward sales: Only a share of profit would accrue to the foreign owned parent company. W=weight (rate of return of inward DI ?) applied on the value of services local sales of foreign affiliates where 0<w<1. Theme 2

12. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Inward delivery of services Imports of services Ms Affiliates Exports by FAs XF Is Local sales SF Is -XF Is Trade data Production data All Import money leaves the home economy. Only a share (w) of profits leaves the home economy Theme 2

13. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics 2005Based on North American Industrial Classification System Commercial services by category and by industry Total, goods producin g industries Manufactu ring [31- 33] Other goods producing industries Total, services producin g industries Trade and transportat ion Informatio n, culture and arts Finance and insurance [52] Profession al, scientific & technical services [54] Managem ent of companie s & enterprise s [55] Other services producing industries Memoran dum item: Informati on & communi cation technolog y CREDITS (in millions of C$) Total, commercial services 6,1585,401757 30,7 313,8007,3376,3519,9919212,33010,163 Communications services 2001955 2,43 09981,27806830551,519 Construction services 5752516511001252810 Insurance services 11 0 3,87 7003,640123150 Other financial services 835 1,91 42391,71964127841 Computer and information services 16814720 4,58 53131,5591742,42336813,811 Royalties and licence fees 81279913 2,63 53791,2851088436411,685 Non-financial commissions 10497773856914865963311 Equipment rentals 1521330519000401110 Management services 1,110892218 4,01 83853096471,860468350863 Advertising and related services 40 0462531854116811334 Research and development 1,0301,01119 1,77 8539216119780351,159 Architectural, engineering, and other technical services 1,265890375 3,41 81605213,00140192304 Miscellaneous services to business 1,0781,00178 2,14 41704701339331,131413 Audio-visual services 260 0 2,03 4321,9770180621 Personal, cultural and recreational services 00022900000 0 Theme 2

14. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 3. Uses of bilateral flow data including asymmetries Mirror data can help in checking whether the flows reported by each reporting country are reflected by its partner country. To check whether the reported flows are the same or compatible. To detect systematic differences in the reporting process. To detect differences in definitions from one country to the other. The annex exposes the different uses of bilateral data, with definitions, examples, asymmetries causes. Reference on internet to work done by Eurostat on Asymmetries in EU Current Account data. http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-DB-06- 002/EN/KS-DB-06-002-EN.PDF

15. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 3. Coverage of reported exports in partner country data and estimates based on mirror statistics

16. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 4. Identification of services for which a country has a comparative advantage in trade. Export Dynamics Compare average growth for specific services among countries(explanation Formula) source ECB. Balassa index of Revealed Comparative Advantage (RCA) measures the intensity of trade specialization of a country within a region or the world. [Explanation, definition, formula, example of the calculation of the Balassa index for i) developed country ii) developing country]

17. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 5. Market access Why is it of interest There is a growing interest in identifying Barriers to service trade and to find out what gains could be achieved by removing those barriers. What does the annex say Work is being undertaken to set up services restrictiveness indexes in major organisations (OECD). The Productivity Commission and the Australian National University have been measuring restrictions on trade in services for a number of economies in Europe, Asia, and North and South America.

18. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Theme 6. Example on global outsourcing Herfindahl index of geographical concentration (shows geographical diversification of export) (Formula, explanations, calculations)

19. STD/PASS/TAGS – Trade and Globalisation Statistics STD/SES/TAGS – Trade and Globalisation Statistics Suggestions ? Do you find analytical themes proposed in the annex useful? Do you have any other comments or suggestions regarding the content of the proposed analytical annex? Do you agree that a new analytical annex along the lines of the draft provided should be included in MSITS to assist users in adding value to the basic statistics?